Sumit Bilgaiyan Equity99
Indian equity markets closed in the green for the third consecutive week due to decline in crude price as well as a bit of a recovery in Q2 FY19 earnings.
More than two-thirds of Nifty companies either met or beat their average estimate in the quarter-ended September. Including mid- and smallcaps, earnings are showing signs of strength, although base effect is seen in some companies. But on an average it is still strong.
With global macros now in favour of the broader market, US bond treasury yields are in correction mode and dollar index starting to correct, bulls are back in action. On the domestic front, cues are volatile due to five state elections and RBI board meeting on November 19.
Till the assembly polls verdict emerges, the market will stay rangebound with a positive bias. Among global cues, trends with respect to crude oil prices, dollar-rupee, trade war and Brexit will impact the market.
Nifty has strong support and resistance at 10,585-10,530 and 10,755-10,850 levels, respectively, this week.
Our past recommendations like L&T Finance Holdings, M&M Financial Services, Bharat Electronics, Atul, Amarjothi Spinning Mills, Power Finance Corporation and Jubilant FoodWorks have given fantastic returns in the very short term.
Acknit Industries manufactures and sells industrial safety gloves and garments in India and in International markets. Over 90% of its productions are exported to European countries. The company generates power through windmills also. Company is delivering robust financial performance since long time and it has posted fantastic numbers for Q2FY19 also.
For Q2FY19, its PAT grew by 68% to Rs 0.91 crore on higher sales of Rs 39.45 crore. During H1FY19, its PAT soared by 106% to Rs 2.10 crore on sales of Rs 73.78 crore.
On very small share capital of Rs 3.04 crore, company has huge reserves of Rs 38.28 crore. Stock is trading at P/E ratio of just 9x on its TTM EPS. Acknit’s share book value works out to Rs 135.93. With strong Q2 numbers we are quite bullish on this stock and recommending a strong buy for medium to long term.
Reliance industries is country’s largest private sector company having market leader in Refining, Petro chemicals, Oil and gas, Digital, Retail and Telecom sector. Company has reported excellent results for Q2FY19, income has improved by 54.5% YoY to Rs 156291 crore while PAT increased by 17.4% to Rs 9516 crore as against Rs 8109 crore. EBIT grew by 24.9% to Rs 22359 crore during Q2FY19.
For H1FY19, its sales grew 55.4% to Rs 297990 crore, EBIT grew by 37.5% to Rs 44808 crore and PAT grew by 17.6% to Rs 18975 crore.
During Q2FY19, JIO has reported PAT of Rs 681 crore and achieved ARPU of Rs 131.7 per subscriber which is highest in telecom industry. At CMP, the stock is trading at P/E of just 17.6x. With strong Q2 numbers and reasonable valuation, we are recommending a buy in staggered manner for medium to long term.
Britannia Industries is one of India’s leading food companies with a 100 year legacy. It is among the most trusted food brands, and manufactures India’s favorite brands like Good Day, Tiger, NutriChoice, Milk Bikis and Marie Gold which are household names in India.
Company has posted strong numbers for Q2FY19. During Q2FY19, its net profit increased by 16.1% to 303 crore from 261.03 crore on YoY basis on 12.7% higher sales of Rs 2869.59 crore. EBITDA grew by 20.3% in Q2FY19 and EBITDA margin expanded by 100bps YoY to 15.8%. It’s PAT increased by 17.59% to Rs 561.11 crore in H1FY19.
September quarter was the fourth successive quarter of double digit volume growth for Company. It trades at PE ratio of 65.6x. We are recommending a buy in staggered manner for medium to long term.
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